Engagement agreements have long been a cornerstone of law firm risk management. In several recent Washington cases, courts have reinforced that central role. In this column, we’ll survey three key functions that engagement agreements play in (a) defining who is—and who is not—the client, (b) outlining the scope of the particular rep- resentation being undertaken, and (c) confirming fee arrangements. As the recent cases illustrate, systematically
using engagement agreements can help avoid or provide a solid defense to claims for malpractice and breach of fiduciary
duty, disqualification motions, and fee disputes (and their regulatory cousin, bar grievances).
Before we dive in, however, a qualifier is in order. When taking on a new matter, lawyers also need to run appropriate conflict
checks and, if necessary, obtain required waivers. Conflict waivers can either be included in engagement agreements or can be
stand-alone documents. In either form, they play a central role in protecting a lawyer and the lawyer’s firm.
Defining the Client
Somewhat counterintuitively, the attorney-client relationship is not defined in the Rules of Professional Conduct
(RPC). Rather, Paragraph 17 to the “scope” section of the
Washington RPCs, like its counterpart under the influential
American Bar Association Model Rules of Professional
Conduct, leaves the definition of the attorney-client relationship to substantive law.
The Washington Supreme Court in Bohn v. Cody, 119
Wn.2d 357, 363, 832 P.2d 71 (1992), articulated a two-pronged
test to determine whether an attorney-client relationship
exists. The first is subjective: Does the client subjectively
believe that the lawyer is representing the client? The second
is objective: Is the client’s subjective belief objectively reasonable under the circumstances? Both elements of the test must
be met for an attorney-client relationship to exist.
That’s where an engagement agreement can play a key
role. Regardless of what someone may later claim he or she
subjectively believed, a contemporaneous written engage-
ment agreement carefully defining who is (and, depending
on the circumstances, who is not) being represented answers
whether that claimed subjective belief is objectively reason-
able under the circumstances.
Two recent Washington decisions provide ready examples.
The plaintiff in Global Enterprises, LLC v. Montgomery
Purdue Blankinship & Austin PLLC, 52 F. Supp. 3d 1162 (W.D.
Wash. 2014), was a client of the defendant law firm in litigation that the firm handled successfully. At approximately
the same time, the law firm also represented a co-defendant
of Global Enterprises in a separate lawsuit in which Global
Enterprises was represented by another firm. Although the
respective firms cooperated and the defendants in the second
lawsuit were aligned, Global Enterprises later claimed that it
had a subjective belief that the defendant law firm was also
representing it in the second lawsuit and sued the firm for
malpractice and breach of fiduciary duty arising out of the
second case. The court entered summary judgment for the
law firm, noting pointedly that the law firm had engagement
agreements defining its clients in the respective cases and
the engagement agreement in the second case did not include
Global Enterprises. The court, citing Bohn, concluded that the
client’s asserted subjective belief was not objectively rea- © i
by Mark J. Fucile
of Law Firm Risk